United Power will dedicate the largest battery storage system in Colorado next week, a 16 megawatt hour Tesla Powerpack in Longmont that the electric cooperative expects will save its members $1 million each year.

But recent policy changes by Tri-State Generation and Transmission Association, United Power’s wholesale power supplier, aim to discourage other cooperatives from pursuing similar projects, creating uncertainty for the deployment of battery projects in much of rural Colorado and New Mexico.

United Power shifted its focus to battery projects last year, after the co-op reached the 5% limit on local renewable energy generation imposed by Tri State. Over the past several years, United Power sought to reduce its purchased power costs by building several solar arrays in its service territory that deliver power at a lower cost than power sold by Tri-State. Blocked from pursuing more local solar projects, United Power developed a strategy to use batteries to help control its peak demand. Last month, United Power also wrote to other co-ops expressing “grave concerns” about Tri-State, including the high cost of power it sells to member co-ops and “Tri-State’s reluctance to embrace additional sources of renewable energy generation due to constraints of its largely fossil fuel generating fleet.”

Controlling peak demand will help the co-op manage its purchased power costs – which could slow the growth revenue that Tri-State receives from United Power. So this past summer, Tri-State changed its Policy 115, which describes how the 5% limit will be implemented. Tri-State inserted language into the policy to include “energy storage devices, such as batteries,” even though the policy was designed to deal with co-ops’ renewable or distributed generation projects.

A June 2018 copy of the proposed changes to Tri-State Policy 115 shows the edits to the policy in red, before those changes were finalized.

Tri-State policy change could block some co-ops from installing batteries
That policy change significantly reduces the economic value of energy storage projects for the 43 electric cooperatives in Colorado, New Mexico, Wyoming, and Nebraska that buy power from Tri-State, and could limit several of those co-ops from pursuing battery projects at all.

Because Tri-State now classifies batteries in the same category as renewable energy projects, co-ops in Colorado and New Mexico that have reached (or are approaching) the 5% limit by building solar projects in recent years could now suddenly be blocked from considering battery projects.

The policy change could also discourage co-ops that haven’t reached the 5% limit because instead of being able to use the battery to directly reduce peak demand charges from Tri-State, co-op battery projects will instead be compensated as though they were a source of energy generation – at a less valuable rate that is established by Tri-State.